Failure to form Greek government forces new elections

Failure to form Greek government forces new elections

1of9People walk outside the Greek parliament on Tuesday, May 15, 2012. Greece is headed for another month of political paralysis ahead of new elections in mid-June, after party leaders on Tuesday failed to reach an agreement to build a coalition government. The protracted deadlock and the prospect of an anti-austerity party winning the new vote hammered Europe's markets on fears that the debt-crippled country could be forced out of the European single currency, triggering shock-waves throughout the 17-country eurozone. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

2of9People walk outside the Greek parliament on Tuesday, May 15, 2012. Greece is headed for another month of political paralysis ahead of new elections in mid-June, after party leaders on Tuesday failed to reach an agreement to build a coalition government. The protracted deadlock and the prospect of an anti-austerity party winning the new vote hammered Europe's markets on fears that the debt-crippled country could be forced out of the European single currency, triggering shock-waves throughout the 17-country eurozone. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

3of9Greek leader of the Left Democratic party (DIMAR) Fotis Kouvelis, second left, arrives at the presidential palace for a meeting with President Karolos Papoulias in Athens, on Tuesday, May 15, 2012. Greece' president is to meet the leaders of five political parties, broadening talks to try and form a coalition government and end a nine-day deadlock in the crisis-hit country. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

4of9Greek leader of Coalition of the Radical Left Party SYRIZA Alexis Tsipras, front, arrives at the presidential palace for a meeting with President Karolos Papoulias, in Athens, on Tuesday, May 15, 2012. Greece's president is to meet the leaders of five political parties, broadening talks to try and form a coalition government and end a nine-day deadlock in the crisis-hit country. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

5of9Greek leader of the Left Democratic party (DIMAR) Fotis Kouvelis leaves the Presidential Palace in Athens, after a meeting with Political party leaders, on Tuesday, May 15, 2012. Greece's president met the leaders of five political parties, broadening talks to try and form a coalition government and end a nine-day deadlock in the crisis-hit country. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

6of9Leader of the Coalition of the Radical Left party Alexis Tsipras arrives for a political party leaders meeting at the Presidential Palace in Athens, on Tuesday, May 15, 2012. Greece's president met the leaders of five political parties, broadening talks to try and form a coalition government and end a nine-day deadlock in the crisis-hit country. (AP Photo/Aris Messinis, pool)Photo: Aris Messinis

7of9Panos Kammenos, leader of the right-wing splinter Independent Greeks, party arrives at the presidential palace for a meeting with President Karolos Papoulias, in Athens, on Tuesday, May 15, 2012. Greece's president is to meet the leaders of five political parties, broadening talks to try and form a coalition government and end a nine-day deadlock in the crisis-hit country. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

8of9Greek leader of Coalition of the Radical Left Party SYRIZA Alexis Tsipras arrives at the presidential palace for a meeting with President Karolos Papoulias, in Athens, on Tuesday, May 15, 2012. Greece's president is to meet the leaders of five political parties, broadening talks to try and form a coalition government and end a nine-day deadlock in the crisis-hit country. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

9of9People walk outside the Greek parliament on Tuesday, May 15, 2012. Greece is headed for another month of political paralysis ahead of new elections in mid-June, after party leaders on Tuesday failed to reach an agreement to build a coalition government. The protracted deadlock and the prospect of an anti-austerity party winning the new vote hammered Europe's markets on fears that the debt-crippled country could be forced out of the European single currency, triggering shock-waves throughout the 17-country eurozone. (AP Photo/Petros Giannakouris)Photo: Petros Giannakouris

ATHENS, Greece - Greece headed into a month of political uncertainty after power-sharing talks collapsed Tuesday, triggering new elections that could determine whether the country retains its tenuous position in Europe's currency.

Nine tortured days of fruitless talks to build a coalition government fueled increasing doubt that Greece can make enough reforms to prevent the world's largest currency union from fracturing.

"We expect the euro to remain under pressure as a result of this, and pressure on the borrowing costs, the bond yields, of countries like Spain and Italy to persist," said John Bowler, director of the Economist Intelligence Unit's Country Risk Service.

No date has been set for the elections, but they will have to be held by mid-June - the month in which Greece must make more spending cuts to ensure it meets the terms of its international bailout.

The uncertainty has created alarm across the continent, with key leaders fearing that Greece could be forced out of the euro, triggering shock waves throughout the 17-country eurozone.

What Greece now needs is reliability and the will to reform" German Foreign Minister Guido Westerwelle said in a statement. "They are the only way back to growth and competitiveness. There is no alternative."

"We want Greece to remain part of the eurozone," he said.

President Karolos Papoulias will convene a new meeting of party leaders Wednesday to appoint a caretaker government until the election.